The Cost of Credit
To calculate the cost of credit, you need to know this original sum of money borrowed.
What is the Principal?
Consumers have the legal right to examine these two items to see what lenders see.
What are a credit report and a credit score?
When selecting a new credit card, you should look for one that specifically lacks this yearly charge.
What is an annual fee?
This drastic legal measure should only be used as a "last resort" due to its long-term consequences.
What is Bankruptcy?
To use credit wisely, you must be alert for these "warning signs."
What is taking on more debt than you can handle?
Aside from the interest rate and principal, these two factors complete the formula for computing credit costs.
What are repayment time and fees?
These organizations collect information about your financial habits to help lenders determine risk.
What are Credit Bureaus?
To avoid falling into a "debt trap," you should always pay more than this specific amount on your monthly statement.
What is the minimum amount?
These two "self-help" measures involve changing your behavior to fix your financial situatio
What are taking control of finances and reducing spending?
This is the ultimate goal of a Debt Management Plan.
What is to pay off debts?
This is the primary reason why credit costs vary over time, even if your personal habits don't change.
What is the overall state of the economy?
These types of laws are specifically designed to help you understand your financial rights and obligations
What are Federal Laws
Doing this consistently is the most basic rule for maintaining a good relationship with your creditors.
What is paying bills on time?
Before signing on with a professional credit counselor, you should always check these two things.
What are their qualifications and reputation?
This is what a lender is doing when they check your credit bureau file.
What is assessing risk?
You should always do these three things before signing a credit contract to ensure you understand the terms
What are read it carefully, ask for explanations, and get a copy for your records?
This is the primary reason lenders gather information about you before granting credit.
What is to determine how much risk they are taking?
When choosing a card, you should prioritize a "low" version of this percentage-based cost.
What is the interest rate (APR)?
This specific type of structured program, when used properly, helps individuals systematically pay off what they owe.
What is a Debt Management Plan?
These are the "long-term" results of filing for bankruptcy.
What are consequences (or negative impact on credit)?
These are the four specific factors that determine how much any given type of credit will cost you.
What are the source, amount used, repayment time, and the state of the economy?
When dealing with credit transactions, these "protect" consumers and ensure transparency.
What are Federal consumer protection laws?
This is the first step you should take to determine how much debt you can actually afford.
What is making a budget?
Besides cutting costs, this is the third "self-help" method mentioned for improving your financial standing.
What is looking for ways to raise money?
According to the text, the cost of credit is not fixed; it is said to "depend" on these four variables
What are source, usage, time, and the economy?